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WASHINGTON - The federal government will face "serious fiscal problems" without prompt reforms to Medicare, White House Office of Management and Budget Director Mitch Daniels said last week.

The government expects deficits of $200 billion to $300 billion per year in 2003 and 2004, but unfunded liabilities in the absence of Medicare reform could triple the amount of current deficits, Daniels told business leaders in remarks to the U.S. Chamber of Commerce. President Bush will likely propose Medicare reforms, including a plan to add a prescription drug benefit to the program, in his State of the Union address on Jan. 28, according to the Washington Times.

The Bush administration has considered a number of Medicare reform proposals - including a move toward privatization - that would focus on preventive care and offer beneficiaries more choices to help "make each Medicare dollar go further." Daniels said that Bush's fiscal year 2004 budget proposal will call for "moderate spending growth" but did not provide details, the Times reported.